This report is read as follows:
Thanks to the increase in gross profit margin and the contribution of stock investment business, the company's net profit growth in 2019 slightly exceeded expectations, and is expected to continue to open up the market in the medium to long term by virtue of product quality, delivery guarantee and product design capabilities.
Main points of investment:
Raise the target price to 5.04 yuan to maintain the overweight rating. Thanks to the increase in gross profit margin and the contribution of stock investment business, the company's net profit growth in 2019 slightly exceeded expectations, and is expected to continue to open up the market in the medium to long term by virtue of product quality, delivery guarantee and product design capabilities. We raised the EPS to 0.23 (+ 0.02) / 0.25 (+ 0.03) / 0.28 (+ 0.03) yuan in 2019-2021, raised the target price to 5.04 yuan and maintained the overweight rating by referring to the comparable company's 18-fold PE in 2021.
The better-than-expected growth came from the increase in gross margin and the contribution of the stock investment business. In 2019, the company achieved a revenue of 4.712 billion yuan, an increase of 7.43%, and a net profit of 500 million yuan, an increase of 563%. Under the background of Sino-US trade friction, the company adjusts its sales strategy in time, and the sales revenue in the European market is growing rapidly. RMB exchange rate fluctuations, production management efficiency and other factors to improve the comprehensive gross profit margin, in addition, the stock business in 2019 achieved a substantial increase in fair value compared with the same period last year brought a certain contribution.
The retail and manufacturing links of American outdoor furniture develop independently, and the manufacturing links provide development space for China's import dependence. The retail scale of outdoor furniture in the United States was US $6.345 billion in 2018, forming a channel structure based on e-commerce platform, and CR4 is expected to reach 67.7% in 2019. The manufacturing scale is 1.996 billion US dollars, the sales channel is dominated by offline retailers, the market pattern is relatively scattered, and the manufacturing process is highly dependent on Chinese imports, which provides market space for domestic export enterprises.
The traditional main business of leisure furniture is growing steadily and actively arranging overseas channels. On the basis of traditional categories, the company continues to develop new products, stove tables and ovens begin to take orders in batches, outdoor kitchen completes product development, category expansion advances steadily, and the company has self-import and export rights in terms of channels. with product quality, delivery guarantee, product design capabilities are expected to gradually enhance customer recognition.
Risk hints: risks of raw material price fluctuations, exchange rate fluctuations and tariff effects